By Scott Cooley
When you travel abroad and tell people that you are from Illinois, the response usually includes something about Al Capone, corrupt governors, or Michael Jordan. People might even mention our bitterly cold, interminable winters or (delicious) pizzas the size and weight of manhole covers. Now, we might see another reaction: an appreciation of Illinois as a state that is attempting to help more workers save for retirement.
Earlier this year, then-Governor Pat Quinn signed the Illinois Secure Choice Savings Program Act. Starting in 2017, among employers that do not offer a qualified retirement plan, companies with more than 25 workers will need to auto enroll their employees in a Roth IRA account. Employees will have the option to vary their 3% default contribution percentage or cancel their auto enrollment in the program, which does not include an employer contribution, but experience has shown that auto enrollment significantly increases participation in retirement accounts.
There is an acute need for additional workplace savings programs in this country. An estimated 50% of adult private-sector workers in the United States lack access to an employer-sponsored retirement program, with lower-income workers particularly unlikely to have a plan available. Proponents of the Illinois initiative say that 2.5 million workers will have access to the Secure Choice retirement accounts. That includes employees at companies with fewer than 25 workers; those companies will have the option but not the requirement to participate in Secure Choice. The state is in the process of figuring out exactly how many workers will obtain mandatory coverage through Secure Choice.